NEW DELHI: S&P Global Ratings on Thursday cut India’s growth forecast for the current fiscal to 9.5 per cent, from 11 per cent earlier, and warned of risk to the outlook from further waves of Covid pandemic.
The agency lowered the growth outlook saying that a severe second Covid outbreak in April and May led to lockdowns imposed by states and sharp contraction in economic activity.
“We forecast growth of 9.5 per cent this fiscal year from our March forecast of 11 per cent,” S&P said.
Stating that permanent damage to private and public sector balance sheets would constrain growth over the next couple of years, it projected India’s growth at 7.8 per cent in the next fiscal ending March 31, 2023.
“Further pandemic waves are a risk to the outlook given that only about 15 per cent of the population has received at least one vaccine dose so far, although vaccine supplies are expected to ramp up,” S&P said.
Indian economy contracted by 7.3 per cent in fiscal 2020-21 as the country battled the first wave of Covid, as against a 4 per cent growth in 2019-20.
GDP growth in the current fiscal was estimated to be in double digits initially, but a severe second wave of pandemic has led to various agencies cut growth projections.
Earlier this month, the RBI also cut India’s growth forecast to 9.5 per cent for this fiscal, from 10.5 per cent estimated earlier.
It said manufacturing and exports were less severely affected compared with 2020, but services were acutely disrupted. Consumption indicators such as vehicle sales fell sharply in May 2021 and consumer confidence remains downbeat.